(This is the second in a series of multiple Practice Tips on “How to Disclose” Specific Topics)
QUESTION: I represent a Buyer of a single-family home. We are in escrow and I have made many calls to the Seller’s Agent asking for the Seller’s disclosure forms. The only thing that I received was the Seller’s Agent’s Disclosure (the AVID). The Seller’s Agent has just called and told me that the Seller will not complete and/or sign any of the disclosure forms (the TDS, SPQ, and the NHDS).
The Seller is not exempt from completing the forms; the Seller’s Agent sent me an email stating the Seller is “too busy to bother with the paperwork.” Do I have to disclose to the Buyer that the Seller is refusing to provide the disclosure forms? If yes, what exactly do I disclose to the Buyer? Am I obligated to do anything else?
ANSWER: Yes, as the Buyer’s Agent you are legally-required to inform the Buyer if a Seller refuses to complete and/or sign any required disclosure forms. You should tell the Buyer whatever information has been provided by the Seller’s Agent and you should explain to the Buyer that the Buyer is legally-entitled to receive those forms. Your disclosure to the Buyer should be done in a separate writing, such as an email.
Interestingly, California law puts the burden on the Buyer’s Agent to obtain the two statutory disclosure forms, the TDS and the NHDS; you must have documentation in the Broker file which proves not only that you informed the Buyer of this situation but you must also document your efforts to obtain those required disclosures. Repeated telephone calls to the Seller’s Agent is generally not sufficient proof of your efforts.
The TDS law is found in Civil Code Section 1102, et seq. Section 1102.12 provides:
(a) If more than one licensed real estate broker is acting as an agent in a transaction subject to this article, the broker who has obtained the offer made by the transferee [Buyer’s Agent] shall, except as otherwise provided in this article, deliver the disclosure required by this article to the transferee [Buyer] …
(b) If a licensed real estate broker responsible for delivering the disclosures under this section cannot obtain the disclosure document required and does not have written assurance from the transferee that the disclosure has been received, the broker shall advise the transferee in writing of his or her rights to the disclosure. A licensed real estate broker responsible for delivering disclosures under this section shall maintain a record of the action taken to effect compliance …
The NHDS law is found in Civil Code Section 1103, et seq. Section 1103.12 puts the same burdens on the Buyer’s Agent to document that: (1) the Buyer has been advised of the Seller’s refusal; (2) the Buyer has been advised of the Buyer’s rights; and (3) efforts that have been made by the Buyer’s Agent to obtain the Seller’s signature on the NHDS.
The Supplement to the TDS (the CAR SPQ, the PRDS SSC or the SFAR Seller Disclosure) is not required by state law but a supplemental form is required by the three (3) standard Purchase Agreement forms. If the Seller is not meeting the Seller’s contractual obligations, then the Buyer should be advised to issue a Notice to Seller to Perform.
There are a maximum of four (4) steps that the Buyer’s Agent should take when the Seller refuses to complete and/or sign any or all of the disclosure documents:
STEP ONE: Document That You Disclosed to the Buyer that the Seller has Refused to Fully Complete and Sign the Disclosure Form(s).
You should attach to that email a sample, blank copy of each of the disclosure forms that the Seller is refusing to complete/sign so that the Buyer understands what form(s) are the subject of the refusal.
STEP TWO: Document that You have Explained to the Buyer their Right to Receive the Fully Completed and Signed Disclosure Form(s) From the Seller.
STEP THREE: Notify the Seller’s Agent, in an email, that the Seller Must Fully Complete and Sign the Disclosure Form(s) AND Send the Buyer a Copy of that email.
STEP FOUR: If the Seller will still not comply, advise the Buyer in an email not to close escrow without first consulting with the Buyer’s own qualified California real estate attorney.
PRACTICE TIPS
- Buyer’s Agents who are advised that the Seller will not provide any or all of the disclosure forms should follow all of the Steps detailed above. Make sure that a copy of the emails to and from the Buyer and the emails to and from the Seller’s Agent are included in the Broker file.
- Buyer’s Agents can also use these steps as a guide when Sellers refuse to fully complete and sign the contractually-required Exempt Seller Disclosure (ESD) or the Lead Based Paint Addendum required by federal law on residences built before 1978. Make sure that a copy of the emails to and from the Buyer and the emails to and from the Seller’s Agent are included in the Broker file.
- Seller’s Agents should advise Sellers that they need to Fully Complete and Sign all required disclosures and, if the Seller refuses, the Seller’s Agent should promptly notify the Manager or Broker (who may want to discuss these issues with Risk Management Counsel) and the Seller’s Agent should send an email to the Seller confirming Seller’s refusal to follow the Seller’s Agent’s advice and recommendations. Make sure that a copy of the emails to and from the Seller are included in the Broker file.
See Weekly Practice Tip: “How to Handle Clients Who Will Not Follow Advice?”
This Weekly Practice Tip is an attorney-client privileged document for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
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